SeanReadsTheNews

Fortune on AOL's Failed Patch Strategy

In its more proflific days, this blog made frequent sport of traditional publishers bemoaning the fact that there is no way to make money online, which it finds kind of hilarious given that Google and Facebook are two of the most highly valued companies.

Say what you want about AOL, at least its leaders never made that claim.  They may have a new business model every 36 months but they don't try to claim the deck is stacked against them.

J.P. Mangalindan of Fortune Magazine had a column last week about one of AOL's more recent strategic shift, local news via "The Patch," and how that isn't exactly working out either, getting the money quote up front.

The math around Patch has always been tricky. In two years, it rapidly expanded to 863 sites, from Agoura Hills, California to Woonsocket, Rhode Island. Content is supplied by 1,000 professional journalists and some 14,000 bloggers. AOL has poured $160 million into the venture, despite paltry revenues. In 2011, it made just $20 million from Patch. "Basically, there [were] two ways to do it: get the product perfect in one market or go for a land grab approach," explains a former AOL executive directly involved in the company's strategy. This executive, who declined to be identified, says management opted for the latter, spending lavishly to expand and hire staff. "They went all in before they perfected the product and, in retrospect, that wasn't ideal."

When you have a lot of money, throwing it at your problems must be an irrestible urge.

Mangalindan gives AOL its due for a decent report last quarter but also quotes an old friend, Saul Hansell, former technology reporter for The New York Times who jumped to AOL a while back, who sure sounds like he's whistling past the graveyard.

 Not only is Armstrong's dream of a thriving hyperlocal news hub at stake, more than 1,000 jobs are too. "I don't know for sure if Patch will pay off," admits Saul Hansell, former Programming Director for AOL's Seed.com and one of Armstrong's first prominent journalistic hires. "But now that they've built it, as a shareholder, I want them to keep it going for a few more years at least to see if they can capitalize on its enormous potential."

Reformed Broker on Facebook's Private IPO

Josh Brown, The Reformed Broker, has a great column in Fortune today on Facebook's IPO, how it already happened and why you weren't invited.  We give Mr. Brown great respect for finding a new way to talk about the pending IPO.

A comparison between Facebook today, pre-IPO, and almost any other company that is actually public on an exchange yields very little in the way of major differences.  Facebook has billions in capital, owing to the umpteen rounds of money-raising at various levels of the venture capitalism sequence. It has thousands of shareholders by virtue of the fact that it has taken money from firms like Goldman Sachs (GS) and DST Partners who themselves have investor capital plugged in. It has the financial press hyperventilating over their every pronouncement as well as a cottage industry of amateur and professional analysts modeling the company's financials based on any scrap of knowledge that should shake loose from Zuckerberg's pockets.

It's been a truism for a while that being public isn't worth the trouble if you don't really need the money.  Zuckerberg's investors really need the money.  That sentiment isn't entirely foreign to the mainstream coverage of Facebook's filing - but Brown's plain language is bracing and educational.

CNBC Explains the Robo-Signing Settlement

Diana Olick, real estate reporter for CNBC and its associated website, has a great article today on the much-ballyhooed "robo-signing" settlement between the nation's largest banks and most of its various governments and regulators.

Olick's article is refreshing in that it strips away what everyone is saying and gets to what they mean and why the settlement is a good thing - very different from why the banks and governments are saying its a good thing.  She's also much more insightful about the underlying harm that led to the settlement.

The last thing the banks need are fifty state lawsuits over bad foreclosure documents, plus they need to be able to get all these legitimate foreclosures through the courts, so they can stem some losses by reselling the homes. The “robo” scandal has ground foreclosure processing to a veritable halt in much of the county and slowed it everywhere else. Borrowers are sitting in their homes paying nothing. So the banks agree to the deal, any deal, because they have no other choice.

Many reporters have focused on sloppy paperwork by the banks and implicitly concluded that it excuses homeowners from paying their mortgages on time.  Olick correctly observes that this isn't true - but that the settlement might be the best thing for the banks, borrowers and economy anyway.

 

Actor Gary Busey's Bankruptcy Filing: ABC News

It's often been said that inside every corporate communications strategist, there is a consumer/celebrity pitchman waiting to break out.

Based on this report by Susanna Kim of ABC News on actor Gary Busey's bankruptcy filing, I wonder if that's true in reverse for his publicist Michael Conley.

"As with many great American institutions, i.e., General Motors, American Airlines, and others who have utilized the strategic business plan of bankruptcy, Gary's filing is the final chapter in a process that began a few years ago of jettisoning the litter of past unfortunate choices, associations, circumstances, and events, to enable the start of a new and clear path toward peace, happiness, and success with his career and his wonderful new soulmate, Steffanie, and their son, Luke.

This guy really should work for GM or American Airlines.  That was pretty well-done.  In fact, in many ways it's superior to statements issued by the corporations referenced in that it assigns responsibility for the problem to Busey's own actions and associations, doesn't ignore the people hurt by the filing and gives us a reason to care if the reorganization succeeds.

Maybe the difference is that Busey is judgement proof in ways that the directors and executives at GM and American Airlines were not so there is no litigation risk in admitting fault but for whatever reason it sure was refreshing to read.

Fortune: Stanley Bing's "Best Places to Work Survey"

This column by Fortune's humor columnist Stanley Bing on a "Best Places to Work" survey is timely and funny because I'm helping a client with a couple of them right now.

The length of my average workday ...

A. Is basically whatever I think it should be, as long as I get the job done. Some days I even work from home. In my bathrobe!

B. Nine and a half hours. In at 8:30. Out at 6. For the past 15 years.

C. Expands to fill all available space, blocking out the sun, until I exist in a formless, shapeless void filled with nothing but that which must be done.

Bing is a PR person in his secret identity.  It frequently shows.  The truth behind the sarcastic humor in the survey is that 1) very few workplaces are truly distinctive but the judges have to pretend enough are to name winners and 2) Your job as a PR person is to find a way to put form to the idea that a company is a great place work, which is almost always subjective.  

Lots of places that have great perks on paper are terrible places to work in practice and some of the best jobs I've had have been at small shops where the measurable benefits are slight but the work environment is great.

Furthermore, the old, sexist, joke "for every beautiful woman there's a man who's sick of her [stuff]," applies to companies as well.  Sooner or later, we're going to see tell-alls about how horrible is it to work at Google because no work environment is right for every worker.

Remembering Danny Pearl: Cover Story on Al Queda and Tanzanite Trade

From Sarah Needleman at The Wall Street Journal comes the reminder that it's been ten years since Muslim terrorists murdered her former colleague Danny Pearl.

When I launched SeanReadsTheNews, this story on how Al Queda controlled the trade in tanzanite by Pearl and Robert Block, was the kind of story I had in mind for "Best of the Day," and it's how I always remember Pearl's reporting even though it was somewhat atypical for him.

The article convincingly indicted every merchant of tanzanite as a terrorist enabler - a truly ground-shaking piece of business journalism that was a credit to The Wall Street Journal.  I always suspected this story was part of what got Pearl targeted, although I have no way of knowing for sure.

The mosque traders, who aren't licensed as dealers but act as informal middlemen, make clear the gem business must serve their militant brand of Islam. "We as Muslims must unite in dealing in gemstones to help one another and to generate funds to defend Islam from those who want to destroy it," says Aman Mustafa, a Kenyan gem broker and teacher at the mosque, who says he has studied Islamic law in Sudan.

RIP Danny.  The work endures.

It's Time: Let's All Agree to Stop Calling the Economy Uncertain

This post will be about an emerging pet peeve and shouldn't be taken as an indictment of The Washington Post or Chris Jenkins, who just happened today to publish an article on D.C. entreprenuers meeting to swap tips.

The mission is simple: help people handle their own business in this time of economic austerity and continued uncertainty.

The economy has always been uncertain and launching a business has always been high risk.  Even if you launched a business in 1996 or 1997, the odds were still against you.  So why do PR people and the media insist on pointing it out as if it's novel in every pitch, press release and story?

Just like adding "on the internet" to your product didn't make you newsworthy during the dot com boom, "during this time of economic uncertainty," doesn't help now.

 

FT on Slackers, Strivers and Fantasists

Simon Kuper of The Financial Times has a funny story in today's paper comparing the major personality types he encounters, aggressive strivers, laid-back slackers and in-their-own-world fantasists.

This hardly counts as great business journalism but it made me laugh and post it to the Facebook page of SRTN's original editor, Bob, so we're highlighting it today.

Kuper is a self-identified striver, who within the context of the article are the good guys.

Naturally the three types irritate each other. A fantasist friend once told me an idea he had for a book. Being a striver, I began to strategise about finding a publisher. The more I talked, the less enthusiastic my friend became. Eventually, he changed the subject. He never intended to write the book. He just liked imagining it.

While I can't promise that reading this article will reshape your view of the world, your communications audiences and how to engage them or other weighty public relations terms, I can guarantee a laugh and mental ordering of your friends and their categories.

It's Monday.  We'll find something more serious later this week.

NYT: Apple's Supply Chain is Evil

This blogger doesn't really have time to do justice to the most important business story of the week - but it's Charles Duhigg and David Barboza's New York Times expose of workplace conditions at factories making popular Apple gadgets in China that published on January 25.

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

One almost wonders if all of the former Apple employees who were quoted anonymously due to confidentiality agreements waited until Steve Jobs had died to spill the beans on all of the detail the reporters were able to uncover.  

Those quotes, which demonstrate unequivocally that the famously progressive, liberal-loved corporation's leaders knew about working conditions Americans would consider inhumane at their suppliers and at best did nothing and in general did what they could to make it worse.

This is one of the nicer ones.

“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”

You need to read the whole thing - and it prints at 14 pages off the Times' website - to truly understand the impact but the reporters diligently undermine what would be the standard rejoinders to a story like this that alleges harm at a third party.

"We didn't know," shot down by those insider quotes, "we tried to fix the situation once we knew," ditto, "everybody does it," the reporters came up with examples of other companies boosting their suppliers margins to offset safety costs, and so on.

This blog is not so naive as to expect developing countries to adopt Western codes of conduct when they are still trying to grow.  That's not how the West developed and things will always be a little rougher until there is more wealth around.  However, this story came out the same week that Apple reported a cash hoard of almost $100 billion sitting on its books.  Without raising prices, cutting a dividend or affecting its own compensation at all, Apple has the resources to fix this problem.  Jobs and his successors just didn't want to.

This blogger also often takes issue with reflexively anti-enterprise coverage in The New York Times.  That's why it is even more important to take note when they publish an article where they set out to take down a corporate icon, and nail the company over and over again with well-source facts and not just thinly disguished opinions bridging from their own prejudice.

The Times' story is business journalism practiced at its highest level. It should win the Pulitzer this year.

 

Forbes: Village Voice Gets a Bad Rap For Abetting Prostitution

Dan Fisher, veteran legal eagle at Forbes Magazine today takes up the case of down-trodden alternative-weekly The Villiage Voice, which like Craig's List before it stands accused of abetting child prostitution and slavery thanks to its "Backpage.com" racy classified section. 

HIs article was spurred by a hit-piece in The New York Times by Nick Kristof which can be found here.

Dan's piece gets at the heart of The Voice's defense:

Since posters also supply credit-card numbers, it isn’t hard in most cases for police to track down who places those ads. (The advertiser in the Kristof case wrote a plain-vanilla personal ad for “labor day weekend fun” with a 21-year-0ld, but his credit card number allowed him to be quickly identified, Backpage says.)  The Backpage executive said the company responds to about 100 subpoenas a month, and dispatched an employee to testify before a grand jury called by the Brooklyn prosecutor Hersh as recently as September.

It's a tricky journalistic effort to defend companies accuses of crimes like that and Fisher, who is an attorney as well as a reporter, does a great job of making the argument that Kristof's article doesn't hold water.  He argues that there is no way to stop this activity altogether and by shutting down places that play fair with enforcement bodies, it only shifts the activity to even less savory places.

The Voice is engaged in a dirty business and its fair game for journalists to point that out but when accusations are this serious, they really should have the goods before calling for government action.